Making Projects Happen with Group Net Metering Policies

But only a few states allow a lesser-known policy that is critical for the expansion of distributed renewables, particularly community-scale solar — that’s aggregate, virtual, or group net metering. And there are a lot of good reasons to want to see its expansion.

The basic premise is that the output of a renewable system can be shared among accounts. An extension of this policy is allowing multiple electric customers to share in a net metered system’s output. This is often referred to as “community net metering,” “aggregated net metering,” “virtual net metering,” or “group net metering.”

However, whatever you want to call the policy, looking at the small number of states that permit such net metering reveals a myriad of unnecessary exclusions and caveats which limit their effectiveness — and the amount of net-metered solar.

For example, New Jersey’s policy adopted this month is restricted only to public projects. Pennsylvania’s version is called “aggregate virtual net metering” and is limited to individual customers who own multiple meters within a two mile radius. California allows for sharing of credits for multi-tenant properties and also for local governments, but only if all participating accounts receive a time-of-use rate.

But for something shared so virtually as an electron, one needs to ask why these policies include so many unnecessarily restrictive caveats based on things like geographic distance and customer class.

It’s an important enough issue that the net metering report, Freeing the Grid, recognizes aggregate and group net metering policies as key ranking indicator when evaluating states.

Vermont has the most advanced and solar-conducive policy. It started with the concept of allowing multiple farm buildings to join a “group” for on-site generation, Vermont’s expanded “group net metering” law allows offsite generation up to 500 kW (2.2 MW for military). The only requirement is that members be in the same electric utility. That’s it. Groups may be mixed among residential, commercial, and government customers. Local utilities must reward credits and bill net metering customers within a group directly. And, notably, Vermont’s law recently provided time-of-use customers a consistent method for crediting their net metered production. The system has proven efficient, easy, and most importantly encourages net metering.

Why is getting this policy right so important? The expansion of policies like group net metering help dissolve the traditional boundaries of distributed electric generation and are critical for facilitating the expansion of solar net metering.

Choosing the most productive sites: Group net metering allows installers, investors, and customers to choose the best possible site for a renewable energy system. Rather than being boxed in to a less-than-adequate roof or a geographic space too small or too shaded for the most cost-effective net metered projects, group net metering allows for ideal siting, making for a better investment with higher financial returns. Further, group net metering allows for greater flexibility when considering local planning, zoning, or historical requirements. Take for example two homeowners with inadequate roofs for solar. Under Vermont’s group net metering law, those two homeowners could easily join with a third neighbor or businesses and share the energy from a solar tracker installed at a more productive, economical site.

Achieving economies of scale: While traditional net-metered solar often makes a lot of financial sense, group net metering laws allow for economies of scale in larger project development. According to the Department of Energy, the average residential cost of solar is approximately $6/watt nationally. Meanwhile, larger scale distributed solar projects cost $3/watt (for fixed solar) or even below. Consider also that land values vary dramatically even within the same electric utilities, and you see how installing a site a little way down the road can also have a significant impact on financials of a project.

Creative solar finance: Group net-metering policies facilitate community solar projects and third-party ownership models, expanding opportunities for customers. As SunRun, Sungevity and other third-party ownership models have demonstrated, innovative solar financing has proven widely successful in deploying residential net metered solar. This innovation continues with companies like Solar Mosaic who are creating mechanisms for “crowdfunding” projects, where individuals can directly make renewable energy investments. Promising new initiatives are enhanced by conducive local policies.

Reduced default risk: For states that allow third party or Power Purchase Agreement (PPA) investors to offer group net metering, these policies reduce the risk to an investor because should a net metering customer suddenly not have an electric load (a school closes, for example) or not be able to pay (in the case of a bankruptcy), the PPA agreement could be fashioned so that the energy output from the project could simply be transferred to a new customer within the utility if allowed under group net metering law.

More solar for more customers: Group net-metering policies help enable non-homeowners to invest in solar and have also facilitated the proliferation of solar programs for affordable housing tenants. For example, California’s Multifamily Affordable Solar Housing (MASH) Program, was designed in 2008 specifically for low income affordable housing and the California Public Utility Commission reported earlier this month that virtual net metering has allowed thousands of low income tenants to receive the direct benefits of solar as reductions in their monthly electric bills.

In sum, aggregate, virtual, and group net metering polices allow for the expansion more efficient, economical projects to provide renewable energy to an increasingly diverse customer. It key, though, to get the policies right.

State policies and individual utilities should look hard at how to dissolve the traditional, unnecessary boundaries in the industry. Such a policy shift could quickly usher in a brighter distributed renewable energy future.

Andrew Savage is on the executive management team of AllEarth Renewables and is former deputy chief of staff to Congressman Peter Welch.

The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com
or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for
accuracy, spelling or grammar.

6 Comments

Wendy, Colorado has done a great job with its program. We need far more states to create far better and solar conducive policies to achieve scale that we need in solar PV. Compared to Germany, we simply have too many barriers.

Dell Jones,(above) is right on. Any solar credit program should include Solar Water Heating. It is simply more efficient than PV, et. al. and more cost effective. Any heating done with fuel or electricity is more costly than SHW but has no huge profit concentrated driver in legislative feedback, like PV. PV=20% max efficiency, SHW with CVT collectors + 75%. ............ I realize that their is a huge inertia to established forms of profit streams in this country, and hence, a significant pushback to new technology that can replace the status quo, but the domestic will for innovation as it enhances lifestyle ought to account for rewards and news coverage in a huge way. So far, it seems lacking.

I work in Denver's Office of Economic Development and am the lead staff person developing a 70+ acres mixed use net zero energy community - with over 800 residential units (single and multi family) as well as over 200,000 sq. ft. of commercial space that will leverage Colorado's 'solar garden' laws. The PV will be placed throughout the development(ie. residential and commercial rooftops as well as infrastructure) and use aggregated net metering to pool and redistribute the electricity. Since this virtual net metering is a relatively new concept, the challenges include how to equitably pool and distribute the electricity among the building owners and how to set up the finanical billing structure since there is no central entity managing the community of individual homeowners and businesses. The scale of the project reaches almost 7MW and includes the use of geothermal ground source heat pump technology as well as pv.

Massachusetts allows any net metering customer to transfer net metering credits to any other customer with only two restrictions: (1) the customers must be served by the same utility; and (2) the customers must be located within the same ISO-NE load zone (there are three different load zones in MA, and each has a different price of electricity).

Accordingly, "virtual net metering" in MA is very flexible with very few restrictions. There are NO restrictions based on technology or customer class.

If we are truly interested in amassing the benefits of distributed Solar energy (Solar with a capital S) inclusion of solar water heating systems that offset electric water heating MUST be included. Solar water heaters have levelized cost of $.05 per kWh and have the exact same effect on the grid as a residential PV system with the added bonus of stored energy. The energy can be metered and reported just the same as a PV system.

As a tax payer and rate payer I want my money spent for incentives on the lower cost, smaller foot print on the roof, and more cost effect system - solar water heating first.

I like PV and have one myselef. A 3 kW PV cost $10,000 - $12,000 and a 3 kW hot water system cost $4,000- $6,000 (in Florida) and at the end of the year BOTH have the EXACT SAME AMOUT OF ENERGY GENERATED for a family of 4. Community energy programs must include both Solar technologies and should bias toward the more cost effective of the Solar technologies.

The reason for the problems with the renewable energy is in competition from the conventional energy companies and their lobbing power. The federal law, allowing small generating facilities to be connected to the existing grid and the describing the minimal technical and licensing requirements could help to expand the use of the solar, wind and so an sources of energy.

Michael

Add Your Comments

Andrew Savage is the Chief Strategy Officer at AllEarth Renewables, manufacturer of the AllSun Tracker, where he oversees public affairs, communications, and strategic business development initiatives. He serves on the Board of Directors...